Switzerland: Economy Overview

Switzerland is a peaceful, prosperous, and modern market economy with low unemployment, a highly skilled labor force, and a per capita GDP among the highest in the world.

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Economy Overview

Switzerland's economy benefits from a highly developed service sector, led by financial services, and a manufacturing industry that specializes in high-technology, knowledge-based production. In recent years the Swiss have brought their economic practices largely into conformity with the EU's, in order to enhance their international competitiveness, but some trade protectionism remains, particularly for its small agricultural sector. The global financial crisis and resulting economic downturn put Switzerland in a recession in 2009 as global export demand stalled. The Swiss National Bank during this period effectively implemented a zero-interest rate policy in a bid to boost the economy and prevent appreciation of the franc. Switzerland's economy will probably experience modest GDP growth in 2010, when Bern is scheduled to implement a third fiscal stimulus program, but its prized banking sector has recently faced significant challenges. The country's largest banks suffered sizable losses in 2008-09, leading its largest bank to accept a government rescue deal in late 2008. Switzerland has also come under increasing pressure from individual neighboring countries, the EU, the US, and international institutions to reform its banking secrecy laws. Consequently, its government is negotiating measures that would improve transparency within its banking sector and increase cooperation with foreign tax authorities. In 2009 Swiss financial regulators ordered the country's largest bank to reveal at Washington's behest the names of US accountholders suspected of using the bank to commit tax fraud. Bern also has recently signed dual taxation agreements with more than ten countries to improve information exchange. These steps will have a lasting impact on Switzerland's long history of bank secrecy.